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The BBC reports, as shown on Press TV, the Iranian Governments English language propaganda channel that Iran has successfully test-fired an improved version of a medium-range missile.

TV pictures showed the launch of the Sajjil-2 rocket, which experts say has the range to be able to hit Israel and US bases in the Gulf.

Correspondents say it is not the first time this missile has been tested, but the timing is likely to add to current tension over Iran's nuclear ambitions.

The West says Iran is trying to build nuclear weapons, a charge Iran denies.

The US said the test "undermined Iran's claims of peaceful intentions".

"Such actions will increase the seriousness and resolve of the international community to hold Iran accountable for its continued defiance of its international obligations on its nuclear programme," a White House spokesman said.

UK Prime Minister Gordon Brown said the missile launch could boost the likelihood of further sanctions against Iran.

"This is a matter of serious concern to the international community and it does make the case for us moving further on sanctions," he said.

The French Foreign Ministry said the launch was "very worrying".

"A test of this kind can only strengthen the international community's worries at a time that Iran is also developing a nuclear programme with no identifiable civil objective in violation of five United Nations Security Council resolutions," spokesman Bernard Valero said.

In September, Iran was heavily criticised after testing its Sajjil and Shahab missiles which could travel 2,000km (1,243 miles).

Those tests came just weeks after Iran revealed the existence of a previously secret nuclear facility in the mountains near the city of Qom.

Readiness

Like the missiles tested in September, the missile launched on Wednesday uses solid fuel in its two-stage rocket.